President Obama announced that individual insurance plans would be allowed to continue for another year. Here's how the decision affects healthcare.

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THURSDAY, November 14, 2013 — President Barack Obama acquiesced to Americans who complained they were being unfairly forced off insurance plans they liked (and had been promised they could keep) under the Affordable Care Act. Addressing the nation from the White House, Obama announced today that insurers could choose to renew individuals’ health plans for one additional year that had been previously cancelled by the ACA.

The Obama Administration has taken flack in recent weeks, as people on individual insurance plans began to receive notices that their plans would be cancelled because they did not include coverage for hospitalizations, maternity care, or mental health coverage, required under the ACA.

Single mom and psychotherapist Lori Gottlieb shared her dissatisfaction with the change in coverage in an op-ed in the New York Times. Upon learning of the cancellation, Gottlieb contacted a representative from her insurance company, Anthem Blue Cross.

“The Anthem rep cheerily explained that despite the company’s — I paraphrase — draconian rates and limited network, my benefits, which also include maternity coverage (handy for a 46-year-old), would “be actually much richer,” she wrote.

While Obama’s announcement leaves it up to insurance companies to decide which policies to extend and which to shut down, the change could have an impact on the ACA’s general goals. The issue Gottlieb outlines, of not wanting maternity care because she knows she won’t use it, is exactly one of the insurance issues the ACA is looking to change.

“The idea was to get plenty of healthier and younger people onto the exchanges, so the risk pools would be very broad,” said Daniel Ehlke, PhD, assistant professor of health policy and management at SUNY Downstate. That way, the younger, healthier participants could help fund care for the older, less healthy individuals. Unfortunately, many of the healthier, younger people on individual plans (which often reject the old and the sick) will now be their old plans rather than migrating to the exchange.

While the extension of the old plans is only expected to last for one year, the resulting smaller group of sicker, older people signing up via the exchanges could cause premiums to go up, and yielding more expensive insurance plans than anticipated.

One of the defenses for closing the individual insurance market is that not only does it discriminate against the sick, but more people (45 percent) say their coverage is either “fair” or “poor,” compared to people on employers’ plans (only 18 percent), according to a survey by the Center for Health Research and Transformation. However, with the insurance exchanges working so poorly, Ehlke said many people were afraid they’d be kicked off their insurance and wouldn’t be able to sign up for insurance on the exchange.

This has been exacerbated with the error-ridden rollout of HealthCare.gov, Ehlke noted. It’s up to insurance companies to decide if they want to extend the old plans for another year, but because it likely means higher profits for them, Ehlke said most companies likely will. Obama also announced that if they choose to do so, they’ll have to alert their customers of the additional benefits they could receive if they decided to switch to insurance purchased off the exchange.

The announcement of the change comes a day after Health and Human Services announced that 106,185 people had signed up for insurance on the health exchange markets in the first month, though only a quarter of those signups had come in through HealthCare.gov, the federal exchange that the majority of states are relying on.

The botched rollout and Obama’s announcement today has not been promising for the law.

“I fear that any delay — even if it’s one year — gives opponents of the overall legislation further opportunity to cut away at bits,” Ehlke said.

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